Looking For Some Tax Advice
Looking for some advice on a couple of property transfers that affect John And Mary. John & Mary are married today living in Arizona and are filing tax returns as married filing separately. The information in the examples indicates what our marriage status is or was at the particular time or each transaction.
Please explain consequences for John & Mary separately, or as you feel necessary to minimize taxes and capitol gains for each of us. Note that our intent is to keep as much money as possible paying the least amount of tax either income tax, capital gains tax and/or gift inheritance taxes (fed and state). Any other comments you feel are necessary would be appreciated.
What is the long term capital gains rate today? Is it scheduled to changedin the future? What is the depreciation schedule for a real property? How many years?
What is your tax advice on the examples listed below?
Example #1:
John purchased real property, for 25K, 1993 as single man.
Primary residence 1993 thru 2006.
2006 Current value 125K.
NO loans, property owned free and clear.
Sell property in the year 2015 for 175K.
1. John transfers title in 2006 to Mary first, then Mary deeds ownership in 2006 to LLC owned by her for conversion to rental property. Note: both transfers occur after their marriage.
2. 2006 property rents for $500 monthly making $350 net monthly after expenses.
3. Property is depreciated for tax savings.
4. In 2015 LLC sells this property for 175K (gains will fund retirement).
Example #2
John purchased real property for 36K in 2001 as a single man.
Prior to marriage, in 2002 John transfers title to Mary as her sole and separate property.
Mary’s primary residence 2002 thru 2004.
In 2006 the current value is 125K.
NO loans, property owned free and clear.
Sell property in 2015 for 175K.
1. John transferred ownership deed to Mary in 2002 prior to marriage.
2. Mary deeds ownership to LLC owned by her for conversion to rental property. Note: John & Mary were married when this transfer occured.
3. In 2006 the property rents for $500 monthly making $350 net monthly after expenses.
4. Property is depreciated for tax savings.
5. In the year 2015 the LLC sells this property for 180K (gains will fund retirement).
Thanks for taking a shot at this NKIT3, your reply is appreciated.
You only pay taxes on INCOME.
When you deduct the taxes paid and the cleanup, advertising and closing costs, how much PROFIT is left? That is what you will pay taxes on. There is no tax consequence if there is no profit.
[addsig]
thanks, i was begining to think our government was evil or something,